Where Do Big Projects Live
Software outsourcing has made a long way already and it has more or less reached the phase of steady growth which is a typical feature of a mature, developed phenomena. Thus its characteristics are easier to describe. First of them is the significant separation between countries hosting outsourcing service providers, and countries which mostly contribute to the demand for these services. Economic reasons are decisive here, so naturally the latter group consists of developed countries: USA, UK, Germany, Switzerland, Australia and others.
USA (together with Canada which is technically a part of the same IT cluster) remains the leading host of IT businesses and projects and thus contributes most of all to the worldwide demand for outsourcing services. Outsourcing has long ago become a notable factor in US economy, causing numerous debates about its impact and future trends. Naturally, the massive employment of abroad labor resources produces concerns among industry workers at home. However, the best response is to compete, not to complain; and the local IT resources are gradually joining the outsourcing segment themselves. Since the end of 2012 it was often remarked in media that inner market of outsourcing (that is, on-shoring or in-house) services is growing steadily in North America.
EU is also enjoying the rapid growth of IT industry. The trend of post-industrialism is even stronger here so hi-tech branches tend to enlarge their market share. Precise machinery, labor automation, online banking systems, entertainment – all that makes insatiable (at least now) demand for newer, smarter solutions. At the same time, shortage of skilled software engineers and desire to develop more cost-effective business schemes urge European IT companies to seek for offshore contributors. Due to some obvious reasons, which we discussed in our previous entry, they tend to find outsourcers just beyond the border. Former USSR members (such as Russia and Ukraine) and some of the eastern EU members (such as Romania or Poland) are actively growing their potential as prominent offshoring/nearshoring centers.
UK holds a specific place in this picture. Being a part of EU, it nevertheless has more economic and cultural connections with some abroad territories due to its geographic placement and therefore is less bound to regional services providers. It possesses the most powerful – and therefore demanding – software development cluster in Europe, which does not escape the pan-European trend of IT specialists’ shortage. According to experts, UK’s share in the IT outsourcing market in EMEA region (Europe + Middle East + Africa) is about 84%. This does not clearly define the country’s IT industry maturity compared to its continental peers, but definitely indicates its sharpest need for abroad contributors. In order to meet the industry’s interests, UK employs outsources from many different locations.
Places To Find Remote Contributors
Today the Asian countries still occupy the top positions in the global outsourcing niche. In a report issued by Tholons company for this year, 100 cities are ranked according to their popularity as outsourcing destinations. As expected, India occupies the top with Manila, Philippines being the only combo-breaker with its place #3. What is less expected is the 9th position held by Dublin, Ireland – well, its potential as a nearshoring destination for UK-based companies explains that quite enough. Place #10 belongs to Krakow, Poland; so this is the where Eastern Europe has reached so far – not so bad given the positive dynamics of growth. Several Chinese cities are also close to the top; a representative of Latin America — San José, Costa Rica – is their neighbor. Several steps down, Africa kicks in – Johannesburg, South Africa is at the position #22. It is also worth noting that the Eastern + Southeastern + Southern Asia together own more than 30% of the list.
A conclusion can be made that the dominancy of this triumvirate is being challenged by multiple emerging new outsourcing clusters: Eastern Europe, Middle East, Africa, Central & South America. Whether they will succeed depends on what will the further IT evolution bring.
Opinions About The Niche’s Future
Worst case scenarios exist for any area of technology. Given that software outsourcing had a rushing start due to specific economic circumstances and at a certain stage of the IT industry’s living process, it is possible it could decline in case of big changes in the industry’s economy or due to new strategic solutions becoming trendy. Some experts are quite confident in their forecasts about the fall of outsourcing industry coming soon.
Cloud migration is often named as one of most threatening enemies of software offshoring. IT enterprises could prefer to save costs by lending infrastructure, not workforce. It is difficult to speak of noticeable trends here as the cloud adoption is still a developing segment. But most possibly, both schemas will be combined in some way.
Intercomputer Global Services also provides the services of IT Outsourcing. We belong to the emerging new outsourcing cluster – Eastern Europe, which, however, is rapidly developing and is going to double its share in the global IT outsourcing market. Companies are looking for new destinations and new ways. We are ready to offer our visions and solutions. Contact us to know more.